Wednesday, September 26, 2012

Rebuilding Iraq’s Electrical Network In A Warzone 2003-2005

Electricity production was one of the crucial issues that the United States and Iraqi officials decided to work on after the 2003 invasion. The national grid was an integral part of rebuilding the country since so many other sectors of the economy were dependent upon power such as services like water and sewage, in addition to businesses. The problem was the power network was in poor shape after the Gulf War and sanctions, and ran into more with the looting and insurgency that came after the fall of Saddam Hussein. That was only the beginning as American companies ran into huge cost overruns, the U.S. ended up revising their rebuilding goals, which led to more delays and cancellations in work, and the Iraqis proved incapable of running and maintaining many of the installations the U.S. built for them. In the end, the U.S. suffered from poor planning and management, as well as working in an unstable environment with the insurgency, which undermined its goals to provide uninterrupted power supply to Iraqis.

Even before the onset of hostilities, Iraq’s power network was facing major problems. Before the March 2003 invasion, the country was producing an average of 4,075 megawatts per day. This was not distributed evenly, as most of the power was sent to Baghdad. As a result, the capital enjoyed 16-24 hours of electricity per day, while the rest of the nation had about 4-8 hours. Not only that, but the national grid was a mess. That started with the Gulf War when power plants, transmission lines, substations were all targeted and damaged. This was denied at the time, but one of the goals of the strategic bombing in 1991 was to destroy Iraq’s infrastructure to undermine the government. (1) Then Iraq underwent thirteen years of sanctions, during which repairs were made, and the system was maintained in an ad hoc manner using whatever materials were available. Some of those techniques actually degraded equipment. By 2003, Iraq had a nameplate capacity of 9,000 megawatts, but was producing half of that, because of all the problems it underwent. The system was so fragile that if one part of the network went down, the entire system could be knocked out. This presented a wide range of challenges for the incoming Americans.

The U.S. started from scratch when it came to Iraq’s power industry. That was because the poor pre-war planning did not include any real ideas for the electricity network. The first thing the U.S. did was to put the Electricity Commission back together, which would eventually become the new Electricity Ministry. In May 2003, the Coalition Provisional Authority (CPA) appointed Dr. Karim Waheed al-Aboudi the new head of the commission, who previously was its director general. U.S. advisers were also placed within the Iraqi administration. Second, in April 2003, the U.S. contracted Bechtel to do an assessment of the power system. It finished its review in May, and estimated that repairing the entire network would cost around $6 billion, and would require years of work. Third, the CPA decided to buy gas turbines to boost production. It thought it was a quick and easy way to generate power. It also believed that Iraq’s natural gas industry would quickly be rebuilt and provide fuel for the turbines. These plans quickly ran into difficulties. One was that during the summer, looters were systematically stripping electrical towers for their copper, which was then sold on the black market. During the invasion for example, 50 towers were damaged. In comparison, from April to mid-June, 700 towers were stripped. Iraq also lacked trained personnel to carry out repairs and upgrade the system. It didn’t have enough fuel to run its existing power plants. The CPA and Oil Ministry ended up scrapping their plans to build a national natural gas delivery system, and the industry was not rebuilt, which undermined the gas turbine plan the U.S. was implementing. To add to all that, the insurgency quickly began targeting the power network, leading to almost daily attacks. That led to huge cost overruns, deaths, delays, and employees and companies refusing to work out of fears for their safety. These problems would continue for years, and was one of the main reasons why Iraq’s power network never met the public’s demands.

That didn’t seem to stop Paul Bremer. In the summer of 2003, he announced that the U.S. would return Iraq to prewar power levels by October. At the time, the country was producing around 3,500 megawatts. The Coalition created the Electricity Action Team to follow through with Bremer’s promise, but found out there were no actual plans on how to achieve his goal. In August 2003, the Action Team decided to carry out quick repairs of the existing infrastructure, rather than build any new plants. By October, the Americans actually surpassed their goal, reaching 4,518 megawatts. At the time, Bremer was warned that achieving that amount would lead to breakdowns later on, which is exactly what happened. It also set the precedent that all progress in the electrical industry would be measured by daily power production, something that Iraq’s Electricity Ministry still uses to this day. The October level proved to be fool’s gold as it was not maintainable, and caused both short and long-term problems for the network.

Bremer wasn’t finished. On August 29, he said that in a year Iraq would have 24 hours of power. The CPA estimated that would mean producing around 6,000 megawatts per day. The Coalition created a new group, the Task Force Restore Iraqi Electricity to carry out this plan. It signed contracts with the $5.56 billion Congress allocated for the power system in November. Work orders for 110 projects were handed out, and almost every one ended up going over budget, because of the worsening security situation. When Bremer’s one-year deadline was reached, Iraq was only producing around 4,200 megawatts. That showed that U.S. officials were right. When Bremer pushed for a quick increase in production during the summer of 2003, it was going to cause problems down the line, which would decrease output. He didn’t listen to them however, which led to the failure of his August promise. As a result, many Iraqis began blaming the Americans for their power outages.

When the CPA ceased operating in the summer of 2004, new Ambassador John Negroponte ordered a review of the entire rebuilding program. That led to the diversion of $1.3 billion from electricity projects to other programs like the security forces. Many projects ended up being cancelled or revised as a result, which was another setback for the national grid. By March 2005, production was still below the pre-war level of approximately 4,000 megawatts. The U.S. blamed the lack of security, sabotage, fuel shortages, the limited capacity of Iraq’s ministries, the lack of maintenance, poor management, and cost overruns. That showed that the Americans were not able to overcome many of the problems that existed before the U.S. invasion, and was not able to contain the insurgency either.

By 2005, contractors were running into all kinds of problems operating in Iraq. Bechtel had a $1.1 billion deal to work on the power network. The Special Inspector General for Iraq Reconstruction (SIGIR) and the United States Agency for International Development (USAID) Inspector General found that the company failed more often than not to meet its objectives. One example was the Dora Power Plant that serviced Baghdad. Bechtel was supposed to rehabilitate two of the four steam turbines at the plant. Poor maintenance led to them breaking down before the 2003 invasion. In August 2003, Bechtel started work at Dora, and was supposed to finish in nine months. It ran into delays, and didn’t complete its work until the end of 2005. The project was initially priced at $34.1 million, but ended up costing $121.1 million. One problem was security. Electricity Ministry employees and Bechtel subcontractors refused to work at the site, because of nearly daily attacks by insurgents, which often targeted the work camp that had been constructed there. In a rare case, the U.S. military ended up providing security at the plant. That still didn’t stop several subcontracts from withdrawing by the summer of 2004. By June 2004, work on the two turbines was nearly completed. By February 2006, only one was working however. The other just needed a simple process before it too could come on line. Because of cost overruns, the Electricity Ministry was given that task. The Ministry proved not ready to operate the plant or maintain it. In 2006, one of the turbines had a “catastrophic failure,” because of poor maintenance. A repair was made, but then it broke down again in April 2007. The U.S. then took over running the facility, but fixes were not completed until the end of the summer. Here all the problems with the American reconstruction effort were apparent, the most important of which was the insurgency, which made work nearly impossible for periods of time, and led to huge cost overruns, and the failure to meet deadlines.

There were other major difficulties as well. Bechtel had a $100.6 million contract to rehabilitate the Baiji Thermal Power Plant in Salahaddin. It stopped work in only three months, and then had the contract cancelled after spending $7 million. The company also had a $381 million deal for the Mansuriyah Natural Gas Power Plant cancelled. In February 2004, the USAID fast tracked the project, but work was stopped in the summer due to Ambassador Negroponte’s review. By the spring of 2005, the contract was negated after $62.7 million was expanded. All the turbines, generators, transformers, and other equipment Bechtel had purchased was donated to the Electricity Ministry, which said it would use them in Najaf. In March 2004, the Defense Department gave a $500 million contract to Perini to repair the transmission and distribution lines in southern Iraq. As part of that deal, the business was to rebuild five substations and rehabilitate the distribution network in Basra. Because of the high costs, Perini ended up only working on the substations. In October 2004, it started work, and was finished in September 2005. The problem was the Electricity Ministry didn’t install distribution and transmission lines to use any of the stations Perini had fixed. The Ministry took a year and a half to do that. From June to October 2004, Perini got another task order to build more substations and distribution networks in Babil, Anbar, Dhi Qar, Najaf, and Basra. By the end of the year, half of those contracts were cancelled. The company still earned $123 million, while only completing $26 million in projects. These all highlighted the poor management of the Americans. There were constant reviews and revisions of the reconstruction program. That led to work stoppages, and changes and cancellation of orders. There was also a lack of coordination with the Iraqis, hence instances where a U.S. company finished work only to find that the Electricity Ministry was not ready to use or operate the facility, and it sat idle as a result.

The U.S. set the rebuilding of Iraq’s power network as one of its main priorities. It was a basic necessity of the economy, and was felt to be a quick way to improve the living conditions for Iraqis. The lack of strategic thinking however undermined much of U.S. effort. Paul Bremer for example, made a series of promises about power production without having any plans in the works on how to achieve them. The Americans also failed to effectively manage many of the projects, there was a lack of oversight, constant reviews led to revisions and the cancellation of contracts, the Iraqis were often not included in planning, and they couldn’t run many of the facilities they were left with. That doesn’t even include the insurgency, which effectively retarded the reconstruction effort overall. The result was that by October 2005, Iraq was producing just over 4,500 megawatts, the same amount it reached in October 2003. The problem was that the end of sanctions led to a huge increase in power usage as people bought a wide range of appliances that had previously been denied them. That meant demand stood at approximately 7,400 megawatts. To this day Iraq still runs into problems with its work on the electricity network, and has not closed the gap between supply and demand.


1. Gellman, Barton, “Storm Damage in the Persian Gulf,” Washington Post National Weekly Edition, 7/8-14/91


Gellman, Barton, “Storm Damage in the Persian Gulf,” Washington Post National Weekly Edition, 7/8-14/91

Special Inspector General for Iraq Reconstruction, “Hard Lessons,” 1/22/09
- “Quarterly Report to Congress,” October 2004

Wolffe, Richard and Gegax, T. Trent, “The Best-Laid Plans,” Newsweek, 7/21/03

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